After creating a booming online business, Cali'flour Foods is poised for its next phase of retail growth with an investment from Boulder-based brand accelerator, Sunrise Strategic Partners, and Trilantic North America.

“We’ve discussed partnering with an institutional investor for a while, and I know now is the right time and Sunrise is the right partner,”​ said Amy Lacey, founder of Cali’flour Foods​​.

Cali’flour Foods was created after Lacey was diagnosed with an auto-immune disorder and couldn't enjoy some of her favorite foods without getting sick. She found that fresh cauliflower proved to be a great substitute for conventional wheat flour, and created a pizza crusts using fresh cauliflower as the main ingredient. Selling her product mainly online, Lacey has established a strong following of consumers that, like Lacey, needed a gluten- and grain-free alternatives due to personal dietary needs.

When Lacey met with Sunrise Strategic Partners​​ co-founders, Steve Hughes and Vincent Love, two years ago and told them that she would triple the business in 2018, they were skeptical. However, Lacey more than delivered on that goal. In 2018, the company sold a pizza crust every 12 seconds and developed a strong online consumer following.

"Amy Lacey is a force of nature. She has built this business from zero to a lot in two years selling cauliflower pizza crusts online (90% of Cali'flour business is currently online)," ​Hughes told FoodNavigator-USA. "Sunrise makes investments that are $10m to $20m in revenue and she’s on the high side of that after two years."​

Has the e-commerce playing field been leveled for small brands?

Small brands that have grown to $10m - $20m in revenue like Cali'flour has, primarily online, may seem like an anomaly. But according to Nick McCoy, co-founder and managing director of investment banking firm Whipstitch Capital​​ and financial advisor to Cali'flour, the tide of small companies launching online first has grown from 23% in 2015 to 51% in 2016.

McCoy said one major factor that has ignited this trend was the launch of Amazon Seller Fulfilled Prime (Amazon SFP) in late 2015 as a fulfillment option. Amazon SFP allows any size seller to display the Amazon Prime badge on its products, offering their end consumers Prime benefits (i.e. free two-day shipping).

"So now, all of sudden, the ​[online] playing field has been leveled for a really small company,"​ McCoy told FoodNavigator-USA.

"I haven’t seen too many other companies that have become as big as quickly as Cali'flour has, but there is this trend towards more small companies being able to start online and achieve sales ​quickly​." ​

McCoy added that Cali'flour has nailed down its e-commerce playbook including selling its products at a high enough price point for free shipping to make sense from a profit standpoint. The minimum Cali'flour purchase a customer can make is $39.95 for a 3-pack of cauliflower pizza crusts to receive free shipping.​

"They really figured that formula out,"​ McCoy added.

Establishing Cali'flour as 'the gold standard of the category'

The low-carb, high-fiber trend of swapping out white refined flour for cauliflower-based products has taken off in recent years, and Sunrise was looking for the right brand to partner with to tap into the growing market.

"We started doing our research and we found out there are really two kinds of products​ [the ones using fresh cauliflower in their products and other brands using a powdered flour blend with some cauliflower in it],"​ Hughes said.

Cali'flour uses fresh cauliflower grown near its Castroville, California, production plant and mills it down into a paste combined with a handful of other ingredients (mozzarella, egg whites, and various spices) to create its pizza crusts. The result is a product with 1 net gram of carbs compared to other products on the market that have 16g to 17g of carbs per serving.

"We think that’s something nobody has figured how to do this the way Amy has, and​ there are an unlimited number of categories we can go into," ​Hughes said. "We think if we can be purists on this and make Cali'flour the gold standard, Amy will be in a great differentiated position long term."​

Over the next six months, Cali'flour will be rolling out topped frozen pizzas and has pipeline that extends to multiple areas of the grocery store beyond the frozen aisle.

"At retail, a large part of our focus will be frozen over then next couple years, but I think this is a brand that’s going to scale and be here 25 years from now,"​ he said.

'The most important decision we make is who the founder is'

Sunrise Strategic Partners has built a strong portfolio of successful natural product brands (Cali'flour Foods will be its 11th investment) that have reinvigorated traditional center-store categories such as Kodiak Cakes​​ pancake and waffle mixes and clean label chocolate brand Little Secrets. However, it takes more than a great product to attract investment from Sunrise.

"We’ve walked away from 30 investment opportunities. The most important decision we make is who the founder is and the most important value that we look for in a founder is one that's self aware,"​ Hughes said. "There’s no reason for them to reinvent the wheel; we have the wheel."​

Lacey proved that she could handle scaling the brand's e-commerce business and is passionate about pursuing the culinary side of her business. Her Cali'flour cookbook is on the National Best Seller List and she has plans to publish another cookbook.

"It takes a unique person to get to a business to $10m-$20m. It takes a very different skill set to get to $100m,"​ Hughes added.

To grow the retail grocery side of the business, Sunrise and Cali'flour have brought in Mike Anderson, a 30-year CPG veteran, as CEO of the brand who will lead the next phase of growth.

"Goal No. 1 is to get Cali'flour pizza crust into 15,000 stores and stand up an organization that can support that kind of retail business,"​ Hughes said. "We've mapped out the next 60 days, and there’s not going to be a wasted second on Cali'flour." ​